Chapter 2 Habitational Insurance Flashcards
Homeowners basic form
Named perils on buildings and contents
Homeowners broad form
all risk on buildings, named perils on contents
Homeowners comprehensive form
All risks on all items, subject to exclusions
Common Characteristics
- Clear language approach
- Common format or structure
- Policy definitions are uniform
- Extensions of coverage
- Basis of claim payment
Who is insured:
Spouse/partner of the named insured
Relatives either the named insured or spouse
Anyone under 21 in the care of insured
Students away at school
Dwelling
The building described on the Coverage Summary page occupied by the named insured as a private residence
Premises
All land within the lot lines where the dwelling is located
Property Coverage
A - Dwelling Building
B - Detached Private Structures
C - Personal Property
D - Additional Living Expenses
Liability Coverage
E - Personal Liability
F - Voluntary Medical Payments
G - Voluntary Payment for Damage to Property
H - Voluntary Compensation for Residence Employee
Coverage A – Dwelling Building
Includes the dwelling and attached structures, PLUS
• Permanently installed outdoor equipment
• Outdoor swimming pools and attached equipment
• Materials/supplies for construction, alteration or repair of the dwelling or private structures on the premises (NO THEFT)
• Building fixtures/fittings temporarily removed for repair or seasonal storage (10% amount of insurance)
• Outdoor trees/shrubs/plants (5% amount of insurance)
Max $500 per item
Fire, lightning, explosion, aircraft/land vehicles, riot, vandalism
Coverage B – Detached Structures
Any structure on the premises separated from the dwelling by a clear space:
• May be attached by a fence or utility line
• Must be used for private purposes
Coverage C – Personal Property
Three types of property are covered:
• On Premises Coverage
• Off Premises Coverage
• Property of Students
While temporarily away from home attending school
Exclusions to coverage C Personal Property
• Motorized vehicles and their equipment
EXCEPTION –motorized lawnmowers, other gardening equipment, snow blowers
Wheelchairs/scooters with more than 2 wheels used to carry persons with physical disabilities
- Camper units, truck caps, trailers or their equipment
- Aircraft or their equipment
Special Limits of Insurance: All Causes of Loss:
Business Property - $2000 Securities - $2000 Student Property - $2500 Money, Cash Cards - $200 Garden Tractors - $5000 Watercraft - $1000 Computer Software - $2500 Spare Auto Parts - $1000
Special Limits of Insurance: Theft Only
Jewellery/Watches - $2000 Numismatic Property - $200 Manuscripts, Stamps - $1000 Collectible Cards - $1000 Each Bicycle - $500 **Limit does not apply to losses OTHER than theft
Coverage D: Additional Living Expenses
• Increased costs to maintain same standard of living after an insured peril causes damage to insured property
Payable for reasonable time to do repairs or time to settle elsewhere
- Fair Rental Value
- Prohibited Access by Civil Authority
Fair Rental Value
From a portion of the dwelling that cannot be occupied due to damage cause by an insured peril
Prohibited Access by Civil Authority
When an insured peril in the area makes it unsafe to be on
the insured premises
2 weeks coverage
On Premises Coverage
Contents of Dwelling
Other property owned/used on premises usual to ownership or maintenance of a dwelling
Off Premises Coverage
Temporarily off premises anywhere in the world
Personal property stored in a warehouse for theft only
Extension Coverage: Debris Removal
Additional 5% provided when loss greater that amount of insurance.
Extension Coverage: Property Removal
Coverage for 30 days or expiry of policy is provided to protect removed property.
Extension Coverage: Moving to Another Home (within Canada)
Coverage is automatically extended to insure property in transit and at another location up to 30 days, or expiry of the policy (whichever is first).
Extension Coverage: Fire Department Expenses
Up to $1,000 for fire department charges (no deductible applies).
Extension Coverage: Change in Temperature
Physical damage to the dwelling or equipment due to an insured peril,
• Property being claimed was in the dwelling at time of loss.
Extension Coverage: Freezer Food
- $2,000 (no deductible)
- Accidental power interruption
- Mechanical Breakdown (replaces the freezer if due to food spoilage)
Extension Coverage: Lock replacement
- $500 (no deductible)
* To replace or re-key locks
Extension Coverage: TEAR OUT
Repairs to other parts of the building torn apart to repair water damage.
Extension Coverage: Arson Conviction Reward
- $1,000 (no deductible)
* Information leading to the conviction of the arsonist
Extension Coverage: Credit or debit cards
- $1,000 (no deductible)
* Forgery and receipt of counterfeit money
Extension Coverage: Inflation Protection
- Automatically increases the amount of insurance due to inflation for amount of insurance under Section I
- This is applied when there is a loss during the policy period, without extra premium charge
Deductibles
Applies to all property losses unless stated
otherwise
Applies to each occurrence
Applies to the loss, not the limit of insurance
Dwellings & Detached Structures
Replacement Cost (with due diligence & dispatch)
- On same location
- For the same occupancy
- From materials of similar quality
Excludes increase cost due to by-laws
Reverts to actual cash value if not repaired
or replaced
Guaranteed Replacement Cost
Insurer will pay the full cost of repair or
replacement even if it is more that the limit for
the dwelling building, if underwriting criteria met:
- Dwelling must be insured to 100% of value at
all time - Insured must advise insurer of improvements
increasing dwelling value within 90 days of start
of work
Personal Property
Replacement cost basis, except:
- Articles that cannot be replaced.
- Articles for which age contributes to value.
- Property not maintained in good, workable
condition.
- Property not used for its original purpose
Electronic media and books of account are
subject to a special basis of settlement: cost of
materials only (excludes cost to recreate lost
data).
Determining Indemnity
Difficult to determine with rules such as Pair & Set or Parts
Factors Used – the policy will pay the least of:
• ACV of the damaged property at the time of loss
• Insured’s interest in the property
• Limit of insurance
CLAIMS PAYMENT OTHER BASIS OF SETTLEMENT
BUILDINGS SUBJECT TO PROVISIONS:
- Replacement with due diligence and dispatch
- Shall be on the same/adjacent site
- Like kind/quality of materials for same occupancy
- Settlement will be made once work complete
CLAIMS PAYMENT OTHER BASIS OF SETTLEMENT
PROPERTY, INSURED MUST SHOW:
Property was in good working condition and used for
its original purpose at the time of loss
Property was repaired/replaced promptly
Coverage Limits for Coverage A
• Based on 100% of the Replacement Cost of the Dwelling
Coverage Limits for Coverage B
• Up to 10% of Coverage A
Coverage Limits for Coverage C
• Up to 70-90% of Coverage A
Coverage Limits for Coverage D
• Up to 20% of Coverage A
Single Coverage Limit
where Coverage A-D are combined to one limit
Homeowners Basic Form IBC 1151 Included Perils:
Fire, lightning, explosion, smoke
Falling object, impact by aircraft/land vehicle, riot
vandalism, malicious acts, water damage, windstorm or hail, glass breakage, transportation, theft or attempted theft, electricity.
Basic Form: Fire, Lightning, Explosion
Fire
• Excludes application of heat
Lightning
• Includes damage to electrical devices or
appliances
Explosion
• Covers all explosions except ‘Water Hammer’
Homeowners Basic Form; Smoke
“Damage due to a sudden, unusual, and faulty
operation of any heating or cooking unit in or
on the premises, but not smoke from
fireplaces.”
• Damage from fireplace not insured
Homeowners Basic Form: Falling Object
An object that is falling which strikes the exterior of the building
Homeowners Basic Form: Impact by Aircraft/Vehicle
Does NOT include:
• Damage caused by an insured or any employee of the insured
• Damage to animals
Homeowners Basic Form: Riot, Vandalism, Malicious Acts
Riot
• All damage covered
Vandalism and Malicious acts covered with exceptions
Homeowners Basic Form Vandalism & Malicious Acts, exclusions:
• While under construction or vacant
Even if permission granted
• Damage caused by insured
• Theft or attempted theft
Homeowners Basic Form: Water Damage Coverage
• Sudden and accidental escape of water or steam from:
Water main
Heating, plumbing, air conditioning system, domestic water container inside & outside the dwelling
Outside the dwelling is covered is NOT covered for freezing
Water entering premises through hole created by an insured peril
Homeowners Basic Form: Water Damage NOT covered
• Freezing during the normal heating season
if away more than 4 consecutive days
• Seepage or leakage of water
• Sewer backup
• Ground water or rising water tables
• Surface water (unless due to insured water
loss)
• Shoreline ice build-up or waterborne ice
• To the watermain or piping
• While vacant or under construction,
regardless of permission
Homeowners Basic Form: Windstorm & Hail
Opening must be created for the interior of the dwelling and personal property inside to be covered.
Homeowners Basic Form: Windstorm & Hail NOT covered
- Interior damage, unless storm creates opening to building
- Outdoor radio/TV antennae
- Weight of ice or snow
- Waves or floods, whether driven by wind or not
Homeowners Basic Form: Glass Damage
Covers building glass when broken accidentally
• Accidental glass breakage includes shifting of ground or other earth movement.
• Accidental glass breakage includes accidents.
Homeowners Basic Form: Glass Damage NOT covered
• Does not include coverage while the building is vacant or
under construction
Regardless if permission is granted
Homeowners Basic Form: Transportation
Damage to personal property by collision, upset, overturn, derailment, stranding or sinking of any automobile or attached trailer in which insured property is being carried.
• Includes any other conveyance of a common carrier
Homeowners Basic Form: Theft/Attempted Theft
Theft defined: all means of taking property without the owner’s consent.
Homeowners Basic Form: Theft/Attempted Theft NOT covered
- Personal property left at locations you own, rent, occupy unless temporarily living there
- From part of dwelling rented to others if theft by tenant, member of their household or their employee
- Materials when dwelling is under construction
- To animals, birds or fish
- Resulting from trickery or fraud
Homeowners Basic Form: Electricity
Sudden and accidental damage from artificially generated electrical currents
Homeowners Basic Form: Property that is not insured
- Buildings used for business or farming
- Property at fairground/exhibition for purpose of exhibition
- Illegal property, subject to forfeiture
Homeowners Basic Form: Nor Does the Policy Insure Loss or Damage When….
• Occurring after the property is vacant beyond 30 days
• Resulting from intentional or criminal acts, or failure to act by
the insured or anyone acting on their behalf
• Involving the application of Heat (ensuing damage covered)
• Resulting from the release, discharge or dispersal of fuel oil
Homeowners Broad Form (IBC 1153)
All Risks
• Section A – Dwelling
• Section B – Detached Structures
• Section D – Additional Living Expenses
Named Perils
• Section C – Personal Property
• Same as the Basic Form
Homeowners Comprehensive Form (IBC 1155)
All property owned by the insured is covered on an
‘All Risks’ basis
The coverage is determined by the exclusions
Comprehensive Form
Exclusions - PROPERTY:
Buildings or Structures used for business or farming
Property at a fairground or on exhibition
Property Illegally acquired
Evidence of debt or title
Automobiles (except lawnmowers & wheelchairs)
Camper units, truck caps, trailers or their equipment
Aircraft or their equipment
Electronic equipment of the above & watercraft
Special Policies and Endorsements
Watercraft Personal Computers Coin & Stamp Collections Jewelry, Furs Antiques Fine Arts Cameras Silverware, goldware, pewterware TV antenna and satellite dishes Musical instruments
Home Based Business
Insurers may be willing to endorse habitational policies with a Home Based Business Endorsement
• Coverages vary, but most insurers include:
Business Contents
Computer Hardware & Software
Temporary Locations
In transit coverage
